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The Indian economy is at a crossroads with major structural reforms underway, such as a unified Goods and Services Tax (GST) that rolled out on July 1 and an Insolvency and Bankruptcy Code that was enacted last year. The GST would dramatically “formalize” the dominant informal sector that drives the bulk of the economy and open it up for credit access. The bankruptcy code will bolster a determined push by India’s central bank, the Reserve Bank of India (RBI), to clean up bank balance sheets of non-performing assets (NPAs) and provision sufficient capital buffers. Those and other structural changes would prepare the economy for sustained growth over the long term, according to Viral Acharya, the recently-appointed deputy governor at the Reserve Bank of India (RBI), who was formerly a professor of economics at New York University’s Stern School of Business.

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Additionally, India’s equity markets are bracing for a much-awaited uptick in corporate earnings, an increasing flow of new investments from pension funds, provident fund retirement accounts and insurance, and a historical shift in domestic household investments in equities overtaking those by foreign institutional investors. With current stock market earnings multiples at “reasonable” levels, higher corporate earnings and a flush of new money chasing limited equity stock, the stage looks set for Indian stock market indices to triple over the next five years, according to Ridham Desai, managing director and head of India Research at Morgan Stanley.

Acharya and Desai discussed the outlook for the Indian economy and its stock markets on the Behind the Markets show on Wharton Business Radio on SiriusXM channel 111. The show is co-hosted by Wharton finance professor Jeremy Siegel and Jeremy Schwartz of WisdomTree. The segment also featured guest Gaurav Sinha of WisdomTree.

Here are select highlights from their discussion:

Fixing the growth drivers: According to Acharya, it is critical to realize that the Indian economy has “many different drivers of growth” such as private consumption, agricultural output, state-generated output and manufacturing. “It is best to fix the structural conditions for growth, and then when growth comes around, you are ready to capitalize on it in a big way,” he said. He listed the GST, the Insolvency and Bankruptcy code, and regulatory reforms governing the real estate sector among those.

Acharya acknowledged that those reforms may come with some necessary short-term pain. “It’s better to accept slower growth for a short period as long as you are doing the right structural reforms to resurrect that growth to a higher level,” he said. “What doesn’t work is when you do temporary fixes; you are just putting a Band-Aid on what really needs a deeper reform.”

Acharya felt the Indian economy is well-placed on other fronts. On the macroeconomic front, he said growth in output is reasonable with respect to inflation levels; the government’s balance sheet is “quite austere in terms of maintaining a tight fiscal discipline;” and the central bank’s foreign exchange reserves are “quite healthy” relative to imports, external debt and the short-term component of external.

Audio Length: 00:21:51

“Credit is a lagging indicator,” said Desai. “You start fixing the growth problem and then credit will come back.” He also felt that the current distribution of credit — a fifth to the household sector and four-fifths to the corporate sector — would change in favor of the household sector borrowing more. “For example, 300 million new bank accounts have been opened after the new government took over. They are all going to come into the formal credit economy.”